Daniel Manac Case

Some of the operating expenses incurred would be selling, general, and administrative; also research, development, and engineering. They are treated as period costs because as they are accrued or incurred, they are allocated for a designated period an labeled as period costs. Two common examples of period costs are Marketing/Selling and Administrative. Such costs usually occur either after the manufacturing stage or outside the factory.

“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities

The traditional costing method is a distribution of manufacturing overhead costs to the actual products manufactured. By using this

Traditional Cost method is defined as “The traditional method of cost accounting refers to the allocation of manufacturing overhead costs to the products manufactured. The traditional method (also known as the conventional method) assigns or allocates the factory 's indirect costs to the items manufactured on the basis of volume such as the number of units produced, the direct labor hours, or the production machine hours. We will use machine hours in our discussion. By using only machine hours to allocate the manufacturing overhead to products, it is implying that the machine hours are the underlying cause of the factory overhead. Traditionally, that may have been reasonable or at least sufficient for the company 's external financial statements. However, in recent decades the manufacturing overhead has been driven or caused by many other factors. For example, some customers are likely to demand additional manufacturing operations for their diverse products. Other customers simply want great quantities of uniform products. If a manufacturer wants to know the true cost to produce specific products for specific customers, the traditional method of cost accounting is inadequate.” AccountingCoach. (n.d.).

According to Rajasekaran and Lalitha (2010 ) the cost is an estimated amount given for an item or a global expense that the owner of the enterprise

Period cost are cost related to selling and administrative expenses. Product cost are costs related to manufacturing of goods. Classifying period cost as product cost will decrease the expenses, thus increase the operating income.

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

14. When deciding to accept a one-time-only special order from a wholesaler, management should do all of the following EXCEPT: (Points: 2)

At age thirty-four, Daniel Taylor lived the life that most men could only dream of. A teenage protégé when it came to technology and computer systems, the adolescent had started-up his own company in Senior Year at High School, and by age twenty-five had accumulated his first million dollars. The upward trend only continued with the subsequent development of a scheduling, timetabling and rostering application which offered considerable time-saving and efficiency improvements to the outdated systems in use, and was soon purchased by the largest travel agency franchise in the country.

As resources, which are used in the production, of product or service, are limited and have cost; therefore, it is essential for the producer to determine it production. It is also to be recognized that there are various types, of resources and different ratios, of these resources are used to produce optimal quantity, as per budget restraints.

During the month, the company purchased an additional $68,000 of raw materials. During May, $92,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $5,000. The debits to the Work in Process account as a consequence of the raw materials transactions in May total:

Besides, decreasing the production cost is also important as the firm can then lower the price. So the decisions related to change in plant size, process improvement and the training are also important.

Operating expenses includes production costs, such as direct labor, indirect labor, inventory carrying costs, equipment depreciation, materials and supplies used in production, and administrative cost. This was not happening at Alex’s plant. His inventories had increased over the past six or seven months and operational expense also increased. This meant he had a lot of work to do to keep his plant open and he was now aware of it.

In cost accounting, the lack of understanding of the accounting and finance process by the business manager is an incentive for the unethical employee to manipulate the system. Ethics help management in: · Providing factual and true information to its users, · Determining the nominal price of its products, · Maintaining appropriate professional relationships, and · Maintaining efficacy In today?s world of corporate scandals, an appreciation of ethical standards and a commitment to the proper reporting and disclosure of financial information needs to be constantly reinforced within the area of accounting. Absorption and Variable Costing: Absorption Costing: All costs (fixed and variable) of production are product costs. Which means under absorption costing, both variable and fixed manufacturing costs are included as a part of the cost of the product manufactured.

Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.